Summary

When assessing damages for negligent advice that had affected the value of a property a departure from the conventional diminution in value approach had to be justified on the evidence. Any alternative approach had be internally consistent and it could not be right to compare a pre-negligence assessment based on market value with a post-negligence assessment based on some other approach.

Facts

The second appellant barrister (H) appealed and the respondents (G) cross-appealed against the assessment of damages ((2004) EWHC 1205 (Ch)) in respect of H's negligent advice. G owned a property that contained ten residential flats and had been seeking to obtain vacant possession of each flat with a view to reletting on short-term tenancies. H had given negligent advice in proceedings by a tenant for new leases under the Leasehold Reform, Housing and Urban Development Act 1993 that had resulted in a compromise whereby long leases of two flats been granted. The judge had assessed damages for that admitted negligence on the basis of the diminution in value of the whole property based on an assumed sale in the open market to a hypothetical purchaser interested in acquiring the property for retention and letting as an investment. The judge had also increased the post-negligence value to reflect the capital value of the two long leases but he used the value that he felt the Leasehold Valuation Tribunal would have determined rather than the lower value of the premiums actually paid following the compromise. H argued that the judge should have based his post-negligence assessment on the vacant possession basis rather than the investment basis because G had retained the property and still had the ability to sell the flats individually on long leases and keep the full vacant possession value of each. G submitted that the reduced value of the premiums actually received on the two long leases was one of the risks inherent in the negligent advice and should be included in the assessment of damages as one of its consequences.

Held

1) The approach suggested by H was a departure from the conventional diminution in value approach that could not be justified on the evidence. Even if H had been able to justify departure from the conventional approach it was necessary that the alternative approach be internally consistent. It could not be right to compare a pre-negligence assessment based on market value with a post-negligence assessment based on some other approach. (2) The reasonable consequence of the admitted negligence was that G had to go through 1993 Act procedure. The fair and reasonable expectation was that that procedure would have resulted, in the absence of agreement, in the matter being determined by the tribunal in the way that the judge had decided. However, there was no reason to see that as the responsibility of H.